Conservatives to ditch FSA and split Lloyds Banking

[Legal Beagles]

More...

[Amethyst]

White Paper from Conservatives
http://www.conservatives.com/News/News_stories/2009/07/~/media/Files/Downloadable%20Files/PlanforSoundBanking.ashx


''We will abolish the FSA and the failed tripartite system and create a strong and powerful Bank of England with the authority and powers necessary to ensure financial stability''

''The Conservative Party has had long-standing concerns about poor consumer protection in the financial services sector. Consumers have suffered as a result of bad advice and mis-selling, and from a lack of competition in some markets.We believe that the regulatory architecture and culture needs substantial reform in order to provide proper protection for consumers.
• We will create a powerful new Consumer Protection Agency (CPA). The CPA will take a much tougher approach to consumer protection and will be given a mandate to act as a consumer champion. It will be a far more consumer-orientated, transparent and focused body than the FSA.
• We will transfer the regulation of consumer credit from the Office of Fair Trading to the CPA. This will create a unified regulatory regime for financial services firms and consumers.
• We will ensure that the CPA names and shames firms which break the rules. This will act as an incentive for firms to improve their behaviour.
• We will force banks to be more transparent about their retail consumer charges. Effective competition
relies on consumers being able to make informed choices. Increasing transparency on charges will help
consumers compare products. This approach is also being pursued by the Obama administration in the
US.
• We will ask the Office of Fair Trading and the Competition Commission to conduct a focused examination of the effects of consolidation in the retail banking sector. The findings of the OFT and the Competition Commission will help to inform a Conservative Government’s ongoing strategy for disposing of its banking shares.
• We will look to reduce barriers to entry for new banks and building societies in order to increase competition and diversity in the UK banking market.
From''





''At the same time consumers have suffered as a result of irresponsible lending and unfair practices. And
when the crisis broke, the free option at the heart of the banking system was exposed.We cannot continue
with a system where banks make huge profits in the good times but benefit from an implicit taxpayer
guarantee when things go wrong.''

''In the past few years there have also been numerous examples of unfair treatment of consumers – from
aggressive marketing of unsuitable products to the mis-selling of payment protection insurance and unfair
bank charges. This unfair treatment of consumers has continued as the crisis has progressed. As taxpayers
they are funding the bank bail-outs, as savers they are facing extraordinarily low interest rates, and even
responsible borrowers are finding credit lines withdrawn and a sharp increase in credit charges.
In the wake of the crisis financial services consumers may find themselves more vulnerable. Mergers in
the sector have narrowed competition in what was an already concentrated market. And there is a danger
that, as banks rebuild their balance sheets, retail and small business charges may be seen as an easy means
of boosting revenue.''

[Amethyst]

Re: Conservatives to ditch FSA and split Lloyds Banking

More transparency on bank charges
We will require banks to be more upfront with consumers about their charges. In order to create effective
competition in financial services consumers must be in a position to exercise choice based on a
comparison of competing products. Currently a lack of transparency in financial services products,
combined with limited consumer financial capability, often makes this impossible.
Regulators need to address this market failure.We have already put forward a number of proposals that
recognize the need to provide greater consumer protection – for example, banning excessive interest rates
on store cards.We are also committed to introducing reforms which will increase the competitive
pressures within the industry. For example we will increase transparency on credit card charges to help
consumers make responsible borrowing decisions and assess rival offers.
This is in addition to our requirement that credit card bills should include prominent “illustrative
scenarios” that explain exactly how much credit will cost if only minimum repayments are made every
month. This information will also include details of how long it will take to repay credit if only minimum
amounts are repaid, as well as information about how much money could be saved if larger amounts are
repaid each month.
A Conservative Government will require all credit card statements and advertisements to contain
standardised information about borrowing costs. This will include much greater disclosure in a
new, clearer “summary box” information. This will be put on a statutory basis for the first time.
This “summary box” will enable customers to make a genuine comparison of different credit card offers, by
ensuring that lending organisations provide standardised information about interest rates, penalty charges and
other important features of the credit instrument. This will help consumers choose between competing offers.
a data file containing two important categories of information: pricing and usage.
The pricing information would include all the ways that a consumer can be charged. For example, a credit
card provider would list its charges for late payments, foreign currency transactions, cash advances and so
on. The usage information would consist of the information on this customer’s activity with the card for
the past year. This would include the number of late payments, the number of foreign transactions and
other usage data.
Consumers will be able to upload this machine readable raw data onto third party price comparison
websites, which can then use this information to provide detailed advice on whether other credit card
providers could deliver better value for money, given that consumer’s precise usage behaviour.
These third party web sites would have their own disclosure requirements, meaning that they would have
to reveal any compensation they receive from providers or any other potential conflict of interest.
We believe that a similar approach should be adopted across a range of products in order to help
consumers differentiate between competing offers. In addition to credit cards, we believe this approach
could be applied to current and savings accounts, as well as mortgages.
This innovative post-bureaucratic policy will make markets more competitive and help consumers get a
better deal by increasing transparency, enabling switching and promoting better informed choice.
It was developed by Professor Richard Thaler of Chicago University, who is advising us on the technical
implementation of the scheme. The Obama administration in the United States is also planning to adopt
this policy.46
Another important aspect of the CPA’s remit will be promoting public understanding of the financial
system (currently one of the FSA’s statutory objectives). Personal debt has become a serious problem in
the UK, and the CPA will have a significant role to play in helping individuals make more responsible
financial choices. The Conservative Party is committed to improving consumers’ financial awareness and
capability.We have been committed to rolling out a free national financial advice service since April 2008
– we are pleased that the Government has heeded these calls and finally announced similar plans for a
national helpline in their July 2009White Paper. 47

[Amethyst]

Re: Conservatives to ditch FSA and split Lloyds Banking

More transparency on bank charges
We will require banks to be more upfront with consumers about their charges. In order to create effective
competition in financial services consumers must be in a position to exercise choice based on a
comparison of competing products. Currently a lack of transparency in financial services products,
combined with limited consumer financial capability, often makes this impossible.
Regulators need to address this market failure.We have already put forward a number of proposals that
recognize the need to provide greater consumer protection – for example, banning excessive interest rates
on store cards.We are also committed to introducing reforms which will increase the competitive
pressures within the industry. For example we will increase transparency on credit card charges to help
consumers make responsible borrowing decisions and assess rival offers.
This is in addition to our requirement that credit card bills should include prominent “illustrative
scenarios” that explain exactly how much credit will cost if only minimum repayments are made every
month. This information will also include details of how long it will take to repay credit if only minimum
amounts are repaid, as well as information about how much money could be saved if larger amounts are
repaid each month.
A Conservative Government will require all credit card statements and advertisements to contain
standardised information about borrowing costs. This will include much greater disclosure in a
new, clearer “summary box” information. This will be put on a statutory basis for the first time.
This “summary box” will enable customers to make a genuine comparison of different credit card offers, by
ensuring that lending organisations provide standardised information about interest rates, penalty charges and
other important features of the credit instrument. This will help consumers choose between competing offers.
a data file containing two important categories of information: pricing and usage.
The pricing information would include all the ways that a consumer can be charged. For example, a credit
card provider would list its charges for late payments, foreign currency transactions, cash advances and so
on. The usage information would consist of the information on this customer’s activity with the card for
the past year. This would include the number of late payments, the number of foreign transactions and
other usage data.
Consumers will be able to upload this machine readable raw data onto third party price comparison
websites, which can then use this information to provide detailed advice on whether other credit card
providers could deliver better value for money, given that consumer’s precise usage behaviour.
These third party web sites would have their own disclosure requirements, meaning that they would have
to reveal any compensation they receive from providers or any other potential conflict of interest.
We believe that a similar approach should be adopted across a range of products in order to help
consumers differentiate between competing offers. In addition to credit cards, we believe this approach
could be applied to current and savings accounts, as well as mortgages.
This innovative post-bureaucratic policy will make markets more competitive and help consumers get a
better deal by increasing transparency, enabling switching and promoting better informed choice.
It was developed by Professor Richard Thaler of Chicago University, who is advising us on the technical
implementation of the scheme. The Obama administration in the United States is also planning to adopt
this policy.46
Another important aspect of the CPA’s remit will be promoting public understanding of the financial
system (currently one of the FSA’s statutory objectives). Personal debt has become a serious problem in
the UK, and the CPA will have a significant role to play in helping individuals make more responsible
financial choices. The Conservative Party is committed to improving consumers’ financial awareness and
capability.We have been committed to rolling out a free national financial advice service since April 2008
– we are pleased that the Government has heeded these calls and finally announced similar plans for a
national helpline in their July 2009White Paper. 47

[EXC]

Re: Conservatives to ditch FSA and split Lloyds Banking

The Tories have today declared bank charges "unfair" in the party's white paper on financial regulation.

It is believed to be the first time a major political document has taken such a tough stance on charges of up to Ł39 a time for going just a penny over your overdraft limit.

The question is, how far will the party go? If it believes the charges are unfair, will it support the automatic wholesale payback of all unfair charges to reunite consumers with THEIR money?

It's thought nearly a billion pounds of charges have been reclaimed. So far, 6.1 million free bank charges template letters have been downloaded from this site alone.

Victims are still submitting claims to get in the queue (for free template letters, see the Bank Charges guide), even though reclaiming is on hold, awaiting a House of Lords decision in September on an historic test case to determine the fairness of charges.

However, those in financial distress can claim now (see the Bank Charges Hardship guide).

What the Tories say
The Conservative party white paper says: "Much of the analysis of the financial crisis has focused on the Financial Services Authority's inadequate regulation.
"But in the past few years there have been numerous examples of unfair treatment of consumers – the misselling of payment protection insurance and unfair bank charges are just two of the largest currently unresolved examples."

They need to put up or shut up
Martin Lewis, the creator of MoneySavingExpert.com, says: "The fact the Conservative party officially believes these charges to be unfair, is great news.
"It's to be hoped the Tories put their money where their mouths are. These unlawful bank charges were taken from people's accounts without asking.

"No other companies have the power to grab your cash in this way. If your energy supplier has a dispute with you, it needs to take you to court to get the money.

"Once the courts finally decide that they're unfair the only right decision is for everyone who's had a bank charge taken to be given the money back without needing to ask for it.
"Of course, this means a payout of perhaps Ł3 billion to Ł5 billion. If the Tories genuinely believe these charges are unfair, they must support this outcome too.

"Though with the nation's finances in such a dire state, what better way to immediately stimulate the economy than getting this money back into real people's hands."

Test case ongoing
The House of Lords is currently considering an appeal by banks against an earlier ruling both in the High Court and the Court of Appeal that bank charges are subject to fairness laws. If that appeal fails, the Office of Fair Trading (OFT) will decide on fairness, and it's provisionally stated they are unfair.

Yet the case is primarily about current charges, and it is uncertain the impact the result will have on those wanting to reclaim. While it's likely to be a huge help and make it very difficult for banks to fight claims, the likelihood is customers will need to apply or fight to get the money back, rather than simply being given it.

The Tories, should they get into power, propose to establish a Consumer Protection Agency to shield the public against bank mistreatment, though it's unclear how this would impact bank charges

The Labour government's white paper on financial regulation, published earlier this month, included proposals to create a mass reclaiming body to instigate group compensation claims on behalf of large swathes of consumers, where necessary. It identified bank charges as a major issue but did not brand them unfair.

Three years too late
Martin Lewis adds: "Finally, some politicians have got off the fence. The only shame is, it's three years too late. It's not exactly political bravery to call these charges unfair now that banks have become the bogeyman, and we're at the final test case stage at the House of Lords, with the banks having already lost twice.

"Where were the Tories, or any political party for that matter, in the early days, when people were having their bank accounts closed, and being mistreated at the first attempts to get their bank charges back?

"Now this has become the biggest consumer revolution since the poll tax riots, finally, the political elite want a piece of the action."

Further reading/Key links

Fight back: Bank Charges, Bank Charges Hardship
Comment/Discuss

Discuss this MSE news story: Bank charges

[Amethyst]

Re: Conservatives to ditch FSA and split Lloyds Banking

Just cause it interested me

RICHARD H. THALER is considered to be one of the founders of behavioral economics—the study of how thinking and emotions affect individual economic decisions and the behavior of markets. He investigates the implications of relaxing the standard economic assumption that everyone in the economy is rational and selfish, instead entertaining the possibility that some of the agents in the economy are sometimes human. Thaler is Director of the Center for Decision Research at the University of Chicago Graduate School of Business. He is coauthor (with Cass Sunstein) of Nudge: Improving Decisions About Health, Wealth, and Happiness.

[natweststaffmember]

Re: Conservatives to ditch FSA and split Lloyds Banking

Just cause it interested me

RICHARD H. THALER is considered to be one of the founders of behavioral economics—the study of how thinking and emotions affect individual economic decisions and the behavior of markets. He investigates the implications of relaxing the standard economic assumption that everyone in the economy is rational and selfish, instead entertaining the possibility that some of the agents in the economy are sometimes human. Thaler is Director of the Center for Decision Research at the University of Chicago Graduate School of Business. He is coauthor (with Cass Sunstein) of Nudge: Improving Decisions About Health, Wealth, and Happiness.

Who is he and what is his relation to the thread cos I am a bit confused

[Amethyst]

Re: Conservatives to ditch FSA and split Lloyds Banking

Page 46

This innovative post-bureaucratic policy will make markets more competitive and help consumers get a better deal by increasing transparency, enabling switching and promoting better informed choice. It was developed by Professor Richard Thaler of Chicago University, who is advising us on the technical implementation of the scheme. The Obama administration in the United States is also planning to adopt
this policy

[natweststaffmember]

Re: Conservatives to ditch FSA and split Lloyds Banking

Tories brand bank charges 'unfair' | This is Money